WILMINGTON — Advocates for legalized marijuana in North Carolina have fought an uphill battle with little luck. But, according to some in the tech industry, they’ve been thinking about it all wrong.
Carrie Roberts is the senior consultant at Medicine Man Technologies, a Denver-based consulting group for “canna-businesses.” The company recently visited Wilmington’s TekMountain, to give a presentation on the future of canna-business.
“I think some people do believe a groundswell of public opinion will legalize cannabis,” Roberts said. “But that’s not necessarily so. Marijuana remains a Schedule I drug, so it depends on how things work at the state level, and that’s very different in each state. So, the business opportunities are different in each state.”
Betting on ‘canna-business’
Medicine Man was founded in 2012, the same year Colorado legalized recreational marijuana. The company started out consulting local dispensaries, but as the political climate changed under President Barack Obama, they found new opportunities in other states.
Part of Roberts’ job is helping entrepreneurs find opportunities in the growing cannabis industry. Many of these businesses are what Roberts called “ancillary;” they don’t directly involve the cannabis plant. Often, these businesses start up before legalization takes place.
“Even before legalization, you’re going to see these ancillary business that don’t actually touch the plant,” Roberts said. “People are surprised by how far the industry reaches beyond just growing and selling. But there’s a whole industry of prepping agricultural areas, warehouses, there’s security, management and accounting. There’s consulting, which was the niche I found. These things are up and running before there are seeds in the ground.”
Like most things entrepreneurial, these businesses are taking a risk, betting on eventual legalization. And, as with most start-ups, that risk meant gauging trends and social change. Most of the states where Medicine Man did consulting work had legalized medicinal – often followed by recreational – marijuana through the use of voter initiatives and ballot questions. The Obama administration increasingly pulled the Department of Justice back from interfering with these state-level legalization measures (especially in the 2013 Memorandum from then-Deputy Attorney Director James Cole); entrepreneurs had only to look to public opinion polls on legalized marijuana to see which way the wind was blowing, and set their sails.
Legalizing marijuana in North Carolina
But every state is different. North Carolina only allows ballot questions for a limited number of issues – mostly related to taxation (you can read a full list here). Legalizing marijuana could be added to that list if the state legislature authorized it by passing a bill. And that’s what House Bill 185, currently in committee in Raleigh, would do – put the vote to the residents of North Carolina to amend the state’s constitution, allowing medical marijuana and marijuana research (through the University of North Carolina).
“North Carolina is not Colorado, it’s not California,” Roberts said. “It seems that legalization has failed every time it’s come up, whether the people want it or not.”
Unlike grassroots initiatives – like Proposition 64 in California – North Carolina voters will have to wait for Raleigh to decide if and when the people will get a say in the issue. And, while recent polls – including one by Elon University – show at least 80 percent of North Carolinians support medical marijuana, Raleigh has been slow to act.
Since partially decriminalizing marijuana in 1977, one major bill was filed in 2014 only to die in committee in 2015, with an additional ban on reconsidering the issue for two years.
According to Roberts, the new tone of the Justice Department under President Donald Trump and Attorney General Jeff Sessions is unlikely to encourage legalization at the state level. At a March 15 conference, Sessions called marijuana “only slightly less awful” than heroin, saying any drug use would “destroy your life.”
So what brought Medicine Man Technologies to North Carolina if the wind is blowing so unfavorably?
‘Moving the ball’ on legalization
According to Roberts, tech-companies and other entrepreneurs can do more than just bet on cannabis legislation. They are in a unique position to actually influence the direction of that legislation.
“I do think the entrepreneurial community can take the lead on this over legislation,” Roberts said. “These are the people with a vested interest in it, and they have the resources and money to get lobbyists to influence decisions.”
Getting tech-hubs like Research Triangle Park and Wilmington’s TekMountain is crucial, Roberts said. That’s why HB 185’s research focus is so important.
“There are some exciting things in the bill, and it’s pretty comprehensive,” Roberts said. “The inclusion of a request for research permits is a big step. Right now, research under NIDA (National Institute of Drug Abuse) is only allowed at University of Mississippi, and that’s most research on the negative, harmful effects of cannabis. The real research grant opportunities for cannabis are still largely untapped.”
Medical research is harder to demonize than recreational use – it’s also big business. Last year the United States paid the University of Mississippi nearly $70 million dollars for marijuana grown for research at the National Institutes of Health. The potential research and development opportunities for investors, Roberts said, is serious motivate to “move the ball.”
“The cannabis industry isn’t going away,” Roberts said. “House Bill 185 might pass, it might not. It might come back in five years. But the change is coming and the industry is already getting ready. And, like any industry, you’re going to see people lobby to grow and support that industry.”
Roberts isn’t just flouting concerns over legalizing marijuana in favor of profit. A former prison guard and deputy sheriff, Roberts is also a member of the Law Enforcement Action Partnership (formerly Law Enforcement Against Prohibition); the group has over 5,000 members from law-enforcement and criminal courts and works for to reform drug policy.
“I understand the objections to cannabis,” Roberts said. “But I was in law enforcement for years. I’ve seen the devastation drugs can cause. Marijuana isn’t one of those drugs.”
According to Roberts, marijuana legalization doesn’t just serve the interests of R&D investors, it benefits users and law-enforcement.
“People who come to our facility in Colorado understand,” Roberts said. “People are going to use marijuana. But when you go from an illicit market to a legal market, things get safer. There’s less crime associated with it, there’s more regulation, less health risk. The profits are regulated, they don’t go back into organized crime. And those profits are taxable.”
Colorado generated approximately $200 million in tax revenue in 2016 from fees, licenses and taxes association with marijuana (you can read the state’s monthly assessment here). What that doesn’t include, Roberts pointed out, is tax revenue from the entire industry of ancillary businesses, the support system of the cannabis industry.
The business of legalized marijuana: the ‘wave hitting our shores’
Roberts and Medicine Man Technology stay up-to-date on the latest ballot measures and state legislation, but for them cannabis culture is about when, not if. It is probably too much to call nationwide legalization of marijuana a foregone conclusion. But it seems more and more canna-businesses are betting on it.
As TekMountain Founder and CEO Brett Martin said, introducing Roberts to a group of investors and entrepreneurs:
“We understand marijuana is illegal, and so people ask us, why pursue this? Well, the answer is that we like challenges – we’re entrepreneurs, we’ve already chosen to wake up every morning and make our own lives more difficult. This is a difficult challenge, but a real opportunity. The thing is, whether you agree with cannabis or not, you have to acknowledge the waves hitting our shores… as an entrepreneur you can’t ignore them.”